The problem is it doesn't work.I would have to disagree.
They can't go at a resolution like 1600x900 and use higher pixel density screens without breaking compatibility of every apps: they are designed for touch target measured in pixels relatively to physical pixels sized at minimum 1/326 inch; they can't go smaller i.e. sensible higher pixel density than 326 ppi without changing approach and adopt support of a new retina factor.
Either Apple goes with higher pixel density screens (and currently, pixel density over 500 ppi allowing retina 4x apps aren't very likely, so we're looking at 3x retina only), and resolution have to be at a minimum width of 960 pixels for compatibility (and anything higher would be treated with letterboxed apps before their updates if the apps can't adapt in width with something like Auto Layout). And then, likely resolution would be picked between 1440x960 and 1712x960 if no width variation, or anything larger otherwise.
Or they keep the same pixel density (still for app compatibility and porting ease) and enlarge again resolution but this time in width too, for example 1280x800 is 4.6" at 326 ppi (and apps would be letterboxed before devs update layout to support larger screens, just like with the iPhone 5 transition). And then can also be imagined a variant at 264 ppi (as the iPad Air) then at 5.7" with apps still usable but simply appearing larger to the user.
1600x900 at 386 ppi doesn't work.
(and at 326 ppi, it's 5.6" so it appears very large for the only new size of the flagship iPhone)
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